Federal appeals court rejects Neb. commission’s effort to collect fees on Internet calls

Neb. commission loses appeal on Internet call fees

OMAHA, Neb. — A federal appeals court has upheld a lower court ruling exempting Internet phone service provider Vonage Holdings Corp. from paying a state telephone fee.

In an opinion released Friday, a three-member panel of the 8th U.S. Circuit Court of Appeals rejected arguments from members of the Nebraska Public Service Commission. The PSC had been trying to force Vonage and its customers to pay into the state’s Universal Service Fund.

That fund helps subsidize phone and Internet services to poor and rural areas, schools and libraries.

“We welcome the 8th Circuit’s decision, which marks the sixth time a federal court has stopped attempts to regulate Vonage’s Internet telephone services at the state level,” said Vonage spokesman Charlie Sahner.

All traditional phone companies pay into the Universal Service Fund. But Voice over Internet Protocol — or VoIP — providers such as Holmdel, N.J.-based Vonage say they provide an information service rather than a telecommunications service.

Traditional telephone providers have argued that VoIP services should be subject to the same oversight and fee requirements that they face.

But VoIP providers say they should be classified as a data service provider and left alone, much as cable TV companies have been. Vonage offers Internet voice service by leasing transmission lines from telephone and cable companies.

Vonage had already benefited from a favorable ruling from the 8th U.S. Circuit Court of Appeals. In 2007, the appeals court upheld decisions barring regulatory agencies in a number of states, including Minnesota, from subjecting Vonage to state tariffs and rate regulations.

Vonage cited that ruling in its lawsuit against the Nebraska Public Service Commission and in fighting the commission’s appeal.

Nebraska Public Service Commissioner Anne Boyle said Friday that she couldn’t comment on the federal appeals court’s ruling, but said the matter and possibility of appealing the case further likely will be discussed at a commission meeting on Tuesday.